By Charlotte Greenfield and Gyles Beckford
SYDNEY/WELLINGTON, July 17 (Reuters) - The Australian dollar was up on Friday as receding fears about Greece and China gave the currency room to consolidate after touching six-year lows a day earlier.
The Aussie AUD=D4 rose to $0.7414, up from THursday's low of six-year low of $0.7350.
"The local currency's strength is borrowing a sense of 'relief' from some of the key themes that motivate it," said John Kicklighter, chief currency strategist at FXCM, in a research note.
Moves in Europe on Thursday to reopen funding to near-bankrupt Greece improved risk sentiment. ID:nL5N0ZW0VG
The Aussie, often used as a liquid proxy for China plays, also benefitted from China's stock market gains. ID:nL4N0ZX16G
"From the China connection, the financial quake from previous weeks has stabilised," Kicklighter said.
But the Aussie was headed for its fourth week of losses, with a decrease of 0.36 percent, while the sterling rose for an 11th week straight week against the Aussie with a 1.1 percent gain. Sterling topped at A$2.1248 GBPAUD=R on Wednesday, its highest in six years.
The New Zealand dollar NZD=D4 consolidated around $0.6520, having touched a six-year low of $0.6498 overnight as expectations of lower rates hardened in the wake of plunging dairy prices and soft inflation data.
The kiwi has fallen more than 3 percent this week and analysts expect the currency to fall further.
"The near-term outlook is bleak for NZD/USD; with little sign of respite, we lower our forecast trough to $0.60," said BNZ strategist Raiko Shareef in a note.
The NZ dollar last touched $0.6000 in May 2009, and Shareef said he expected it to hit that level in the first quarter next year as diverging rate policies come into play.
"We envisage the USD to gain broadly as the Fed lifts off the zero lower bound, come September," he said.
The kiwi's main test next week will be Thursday's Reserve Bank of New Zealand interest rate review, with a rate cut and a strong easing bias in the statement expected.
New Zealand government bonds yields 0#NZTSY= were a tick higher along the curve.
Australian three-year bond futures YTTc1 lost 2 ticks to 97.970, while the 10-year bond contract YTCc1 rose 0.5 ticks to 96.990. (Editing by Simon Cameron-Moore)